The Governor of California
President pro Tempore of the Senate
Speaker of the Assembly
State Capitol
Sacramento, California 95814

Dear Governor and Legislative Leaders:

This report presents the results of a follow-up audit of the California Department of Motor Vehicles (Motor Vehicles) related to certain recommendations made in 2013 by the California State Auditor (state auditor). In April 2013 the state auditor issued a report titled Special Interest License Plate Funds: The State Has Foregone Certain Revenues Related to Special Interest License Plates and Some Expenditures Were Unallowable or Unsupported, Report 2012-110. The 2013 report included recommendations aimed at ensuring that Motor Vehicles charges the correct fees for special interest license plate (special plate) transactions, advertises special plate fees in its publications consistent with state law, and periodically assesses the cost and benefits of updating its automated systems for charging administrative fees.

This report concludes that Motor Vehicles has not fully implemented two of the three recommendations we followed up on from our April 2013 report. Specifically, Motor Vehicles is charging lower fees than required by state law for two of 25 special plates we reviewed. Motor Vehicles agrees and stated it will begin charging the correct fees for these two special plates by March 31, 2016. Additionally, Motor Vehicles is not advertising correct fees for 12 special plates in its publications. Although we noted that the volume of transactions for these 12 special plates was small in fiscal year 2013–14, the volume of transactions could change in the future, and advertising errors on special plate transactions may dissuade individuals who are considering purchasing special plates from doing so.

Motor Vehicles has fully implemented the third recommendation that it periodically assess the cost and benefits of updating its automated systems to reflect its up-to-date administrative costs. Specifically, Motor Vehicles reviewed the cost and benefits in 2013 and completed the update to its automated systems in December 2014. Further, Motor Vehicles stated that it will assess the cost and benefits of updating the systems once every two years.